Uber board sued by shareholders over 3,571 sexual abuse cases

Key Takeaways

• Shareholders allege Uber's board ignored repeated warnings about driver sexual abuse, leading to 3,571 pending lawsuits
• The derivative lawsuit names CEO Dara Khosrowshahi and seeks directors to reimburse Uber for alleged fiduciary breaches
• Uber's stock has dropped 25% since September 2024, and less than 40% of users believe the company prioritizes safety

Uber's board of directors faces a shareholder lawsuit filed Monday in San Francisco federal court, alleging that directors and management systematically ignored warnings about driver sexual abuse. The complaint, led by the Police and Fire Retirement System of the City of Detroit, claims this negligence resulted in 3,571 pending sexual misconduct lawsuits against the company.

The derivative lawsuit takes aim at CEO Dara Khosrowshahi and board members, accusing them of breaching fiduciary duties and violating federal securities law. Shareholders want directors to reimburse Uber directly for damages caused by their alleged oversight failures.

What does the Uber board lawsuit allege?

The complaint labels Uber a "serial compliance offender" whose reputation has been "irredeemably damaged" by negative media coverage. Shareholders argue that board members received repeated internal and external warnings about the company's failure to address sexual abuse by drivers, yet chose not to act.

The lawsuit cites a striking figure: fewer than 40% of Uber users believe the company takes safety seriously. That statistic, according to shareholders, was communicated to the board multiple times. The implication is clear: leadership knew about the perception problem, knew about the underlying safety failures, and did not fix them.

While Khosrowshahi has been "less brazen in pushing regulatory limits" than his predecessor Travis Kalanick, the complaint alleges he continued to skimp on compliance during his nearly nine years as CEO. The lawsuit suggests that cost-cutting on safety measures directly enabled the sexual assault crisis.

Beyond sexual assault: a pattern of compliance failures

The shareholder complaint extends beyond sexual misconduct. It points to federal government lawsuits filed last year accusing Uber of routinely refusing to serve disabled passengers, including those with service animals or stowable wheelchairs. The government also alleged deceptive billing and cancellation practices.

This pattern matters for the legal theory at play. Derivative lawsuits under the Caremark standard require plaintiffs to show that boards failed to implement compliance systems or ignored red flags. A single failure might be defended as an isolated lapse. Multiple, documented failures across different regulatory areas strengthen the argument that oversight itself was broken.

How has Uber's stock responded?

Uber's share price has fallen more than 25% since peaking on September 22, 2024. The company's market capitalization still exceeds $200 billion, but the decline signals investor concern about mounting legal exposure and reputational damage.

The timing is notable. Earlier this month, Uber and Lyft sued New York City to block a new law they claimed would prevent them from removing dangerous drivers. That lawsuit argues safety requires the ability to fire bad actors quickly. The shareholders' complaint makes the opposite point: Uber has not done enough to prevent bad actors from driving in the first place.

What is a derivative lawsuit and why does it matter?

A derivative lawsuit is filed by shareholders on behalf of the company itself, not for their own benefit. The theory is that when directors breach their duties, they harm the corporation. Any recovery goes to the company's treasury, not to the plaintiffs' pockets.

For Uber's board, this structure creates personal exposure. If the lawsuit succeeds, directors would need to reimburse Uber from their own funds or through director and officer insurance policies. D&O insurance premiums for companies facing significant litigation can spike dramatically, affecting corporate governance costs industry-wide.

Uber did not immediately respond to requests for comment. Lawyers for the Detroit pension fund also did not respond.

The safety data Uber disclosed, and what it revealed

Uber published unprecedented safety reports in 2019 and 2021, disclosing thousands of sexual assault incidents. The 2017-2018 report acknowledged 5,981 sexual assault reports in the U.S. alone. The 2019-2020 report documented 3,824 incidents. These disclosures were meant to demonstrate transparency. Critics argue they also documented a problem Uber knew about but failed to adequately address.

Background checks, in-ride safety features, and driver monitoring have all been points of contention. Plaintiff attorneys in individual assault cases have repeatedly argued that Uber prioritized growth over safety. This shareholder lawsuit takes that argument to the boardroom level.

Frequently Asked Questions

Who is suing Uber's board?

The Police and Fire Retirement System of the City of Detroit is leading the shareholder derivative lawsuit, filed in San Francisco federal court.

How many sexual assault lawsuits does Uber face?

As of June 1, 2025, Uber faces 3,571 sexual misconduct lawsuits in consolidated litigation overseen by a San Francisco court.

What are shareholders seeking from Uber's board?

The lawsuit seeks to require directors to reimburse Uber for damages caused by their alleged breaches of fiduciary duty and securities law violations.

Is CEO Dara Khosrowshahi named in the lawsuit?

Yes. Khosrowshahi is among the defendants, with shareholders alleging he continued to skimp on compliance during his nearly nine years as CEO.

How much has Uber's stock declined?

Uber's share price has fallen more than 25% since peaking on September 22, 2024.

Source: Tech-Economic Times / ET